If you want a faster bike, buy one. It would be cheapper than modding a TW.
No aftermarket exhaust makes a better powerband than the stocker on a stock engine. You might pick up a bit of peak horsepower, but you'll loose area under the torque curve, resulting in a slower bike more difficult to ride quickly.
Low-buck option for improved throttle response is to propely jet the carb, especially on North American market bikes that come jetted too lean.
Next step up is a big one, top a performance cam and maybe springs.
Next limiting factor is air flow through the head, which means a ported head.
A bigger carb would open up more airflow.
Next, higher compression. You'll need more expensive gasoline. Might as well go for a bore kit at the same time.
Finally, consider combining a stroker crank with bigger bore and higher compression.
By now, if you used a radical enough cam, you've built an engine with a peaky enough powerband it may match the flow characteristics of an aftermarket exhaust. Too bad the TW transmission has such wide ratios--you'll wind out one gear, then end up under the powerband when you shift. Of course, there is a cure for that problem, too, a closer ratio 6-speed transmission from a XT or TT-R.
By now you'll have $3000 just in parts and machine work. You could buy a really nice Ninja 500 for that and have twice the power of your modded TW, and you'd still have a nice little TW. Multi[le bike Syndrome usually isn't fatal if you're not married.
